Financing

Hi, This is a chief obstacle to adoption. We used savings we had intended for our retirement. Our budget was really tight.

When we started our first adoption we were both working and had no children (so we had more disposable income). We budgeted like crazy people. We did nothing, bought nothing besides food and gas basically for about a year. Kept track of every dollar. Eventually we had enough $$ to complete DS's adoption in cash.Because we had no debt to pay off for DS's adoption, we were able to roll his adoption tax credit (about $11,000) into this second adoption. In addition, the company dh works for chips in $5000 for each adoption (very generous, I know). So that brought us up to $16,000. We saved the remaining $$ by careful budgeting over a couple years. We were a 1 income, 4 person family this time around, so it took a lot longer to save obviously.We just had enough cash for everything except our airline tickets at the end. We put those on the credit card. Paid the cc down over several months, until we got our fed tax return which took care of the balance. Coincidentally we owed $700 on our cc, and our tax return was $695! ha! So we are debt free (except our mortgage) once again!The adoption tax credit is set to expire again (end of 2012 I think?), but they do seem to renew it every time the deadline is near. I think for 2011 (the year we are planning to finalize with DD) it's something like $13,000. So we'll get $13,000 with our tax returns next year.I have heard of banks that offer adoption loans equal to the amount of the federal tax credit. You pay it off when you get your tax return. Another idea: we had originally planned to use a home equity line of credit if we hadn't been able to save up the full amount for our first adoption. Um, I don't know if we have much home equity left because the the fall in home values. :(

Thank you so much for the replies! Have you ever looked into getting adoption grants? I've heard of a bunch of organizations that offer them, so I'm wondering if that's a possible avenue.

We didn't apply for grants - the ones we were aware of are for adopting special needs kids but we adopted via the non SNs route.

Remember that you don't have to have all the money up front. And with the time frames that most countries have these days, you could have 1-3 years or more to come up with the money. As an example, your first payments will be for your application to your agency and your homestudy. Then you will pay your USCIS fees. You will pay some fees when you accept your referral. And you will pay some fees when you travel. I haven't met many people who've gotten grants lately, except for people whose agencies have donors who have contributed to allow the agency to discount fees for particular children who are hard to place because of their special needs. The economy has affected charitable giving substantially. Most of the organizations that used to give grants for adoption got their funds through donations, and those donations have often dried up. While you can continue to look for organizations that give grants, you should definitely pursue other options. No matter how much you hate debt, consider loans. Loans against your tax-sheltered annuity or 401-K are great ideas, because you are essentially borrowing money that is already yours. See if a family member will loan you money, and draw up a written contract, agreeing to pay it back in a couple of years. See if any banks are offering adoption loans, still. And so on. And see what you can do to shave your expenses. Can you cut back on meals in restaurants? Can you sell your gas guzzler car and get a cheaper, but still kid-safe, one? Do you really need to highlight your hair every three months? Do you really need to rent so many videos? Etc., Etc. Sharon

We were not able to lower our monthly, but we did everything we could to afford our first adoption (3rd child). We sold everything we didn't 'need' (regardless of want). We took cash out of our whole life insurance policy. And we ended up getting a personal loan for the rest; after we cashed out our savings. We got a grant from our adoption agency as well as from Show Hope. For the 2nd adoption (4th child) we received a fee reduction, agency grant and grant from Show Hope. For our 3rd adoption (5th child) we didn't have time to do anything to fundraise and he was a sibling call, so no fee reductions or grants are available for those calls. We emptied our savings and emptied our equity in our house. Most grants require the child to be special needs and/or your income to be at a certain level. Most also want you to fundraise some, just to show you're trying to do something yourself. Our fundraising also consisted of my husband just picking up extra work, but it was actively doing something. I never applied for the ones that required fees as I didn't know anyone who ever received one and didn't have a dime to waste. Lisa

We did a home equity line of credit and paid off the majority of it with the federal tax credit. It's awful that adoption is so cost prohibitive.

I have been reading about the adoption tax credit being reduced in 2013 to $5,000. Do you know if this is for the calendar year or tax year. For example, if we are filing for the credit in calendar year 2013 for the tax year of 2012, can we get the 2012 tax credit of $12,000? This is sad news for the adoption community.

I'm pretty sure that you get the credit in the year that you finalize the adoption. So if you finalize in 2012 you'll get the hgher credit when you file your taxes in 2013. And this isn't the first time that the inflated credit has been set to expire and revert back to the $5K. It's been extended, twice I think. Hopefully they extend it again beyond 2012, but I'm not counting on it. I saw from your other thread that you're likely traveling in Jan/Feb 2012. I'm in the same boat. It's going to be a push to get the adoption finalized in 2012 so that I don't miss out. I'm told that it might be close.

You take the credit in the year you finalize. So if your child came home on an IR-3 visa from Russia in 2012, you would take the credit applicable in that tax year. Even though you actually may do your 1040 in 2013, the tax year is 1/1/12 to 12/31/12. Sharon